How many times have you heard jargon such as VaR, IFA and AER and had no idea what on Earth people were talking about? When it comes to finances ignorance is bliss for most Brits, but it could be costing us a lot of money.
A new report has found that two thirds of people could be losing out on cash because they don’t fully understand many financial terms, and 74 per cent say they feel completely bamboozled when talking to financial experts. As a consequence, if they didn’t understand what was being said to them a quarter wouldn’t ask anyone to explain.
Perhaps many of us feel that spending less and saving more is the easiest path to better finances I mean how much money could we actually make from knowing a few financial parlor tricks? Surprisingly the report concluded that Brits are missing out on millions of pounds simply by not being able to grasp basic financial jargon.
In addition to a lack of understanding, many Brits feel stuck in a rut with their finances – with the average person having banked in the same place for more than 17 years. While 52 per cent of people never read the small print on financial documents which require their signature. Four in 10 people have never changed the banking products and financial services they are using, as they can’t be bothered to decipher what could be open to them.
The study was conducted by online investment manager Nutmeg. Katie Prentke English, Commercial Director at Nutmeg, said: “There are millions of people who are not benefitting from key products and opportunities because they are uninformed about basic financial terms.
“There are so many ways of making money go a little further, such as saving, investing, and maximising mortgages, but so few people know about them.”
So what is the solution? How can Brits be encouraged to take more of an interest in financial aspects? Well, this is certainly an interesting approach.
But if Margot Robbie isn’t available, Katie Prentke English has a suggestion: “The industry as a whole to make financial products and services more accessible to everyone.
“This means simplifying the language, and having more ways to explain what the options are.
“We believe more and more people would be open to investing their money if they understood the benefits and that the process could be a simple one. Similarly, people would be receptive to moving money around if they knew they would benefit.”
How up to scratch is your financial knowledge and how many of the 20 terms below do you fully understand?
FINANCIAL JARGON BAFFLING BRITS:
- Asset management
- Capital Gains Tax
- Endowment Policy
- Child Trust Fund
- Profit margin
- Inheritance tax
- Stock market
- Bank of England interest rate
- Tax code